SARS outbreak disrupts IT industry in Asia

The outbreak of Severe Acute Respiratory Syndrome has disrupted the operations of IT companies in Hong Kong, Singapore and China. Analysts warned that the spread of the disease, if unchecked, could limit the supply of some key electronic components, affecting the availability and pricing of some hardware systems.

SARS first appeared in China's southern Guangdong province, which is home to much of the country's low-cost electronics and IT hardware manufacturing industry, before spreading to other parts of the country as well as to Hong Kong, Singapore and Vietnam. Other Asian countries have also reported SARS cases, albeit in far lower numbers, including Taiwan, Thailand, Malaysia and Indonesia, and the disease has spread as far as North America, Europe and Australia.

South Korea and Japan, which rank with Taiwan, Singapore and China as important hardware manufacturing centres have, so far, not reported any cases of SARS.

"At a minimum, the SARS epidemic will cause schedule slippages and disrupt the aggressive growth plans that global electronics companies have for the affected geographies," Aberdeen Group analysts Russ Craig and Peter Kastner wrote in a report. "Worst case, it could result in major supply chain disruptions and another downdraft for an already challenged industry."

At Intel's Hong Kong office last weekend, an employee began to show symptoms that were consistent with the SARS virus, said company spokeswoman Josie Taylor. As a precautionary measure, Intel has asked all of its employees working on the same floor - one of three floors occupied by Intel in a Hong Kong office tower - to work from home this week, extending a similar offer to employees working on the other floors.

Fears of SARS have caused many companies to cancel travel for executives and postpone meetings, said Dion Wiggins, research director at Gartner. In one instance, Sun Microsystems indefinitely postponed its SunNetwork 2003 conference.

Intel employees have been told to avoid non-essential travel, and a planned visit to Taipei by Intel's chief executive officer, Craig Barrett, has been cancelled.

Taiwan has not seen the high numbers of SARS cases reported in China and Hong Kong. Nevertheless, the Intel Developer Forum (IDF) conference in Taipei, at which Barrett would have given a keynote speech, has been cancelled, and the IDF planned for Beijing had also been called off. Both will be replaced by a series of smaller events over the next few months.

IDF conferences planned for Tokyo and Bangalore will go ahead as planned. .

At the Advanced Micro Devices (AMD) office in Hong Kong, employees have also been advised to avoid non-essential travel. So far no AMD employees have been diagnosed with the disease.

In Taiwan, Acer issued a notice to employees banning travel to Hong Kong, Macau and two cities in China's Guangdong province, Shenzhen and Guangzhou. Employees were told to make use of other means to conduct business, such as video-conferencing.

Acer also instructed employees travelling to other cities in China to arrange their itineraries so that their flights from Taiwan to China go through Tokyo rather than Hong Kong or Macau. There are no direct flights between Taiwan and China.

To cope with health concerns, companies in Hong Kong have been scrambling to set up virtual private networks that allow their employees to work from home.

But while technologies such as VPNs are helping Hong Kong companies to deal with the SARS crisis, the ability to disseminate inaccurate information over the internet has presented a challenge for the Hong Kong government.

On Monday, a rumour that Hong Kong would be declared an infected area and quarantined from the rest of the world sparked a run on food stores. in response, the Hong Kong government issued a public denial via SMS that such measures were being considered.

Alongside the growing cost in human lives, the SARS outbreak may have lasting consequences for how hardware makers and investors see the Chinese government, which has been slow to reveal the scale of the SARS outbreak in China and has delayed efforts by WHO investigators to visit Guangdong province.

"The deceit of the PRC government in hiding what has become a serious global health threat will not be quickly forgotten," wrote Aberdeen's Craig and Kastner.

"A new level of suspicion by investors of the government’s ability to protect investments will take years to dispel. After all, low-cost manufacturing and disrupted supply are oil and water in a just-in-time world."

The United Nation's World Heath Organisation put the total number of worldwide SARS cases at 1,804, with 62 deaths, by 1 April. Over the previous day, the number of cases had climbed by 182, with four deaths, it said.

Hong Kong has shown the greatest increase in SARS cases, with 155 new cases reported, and three deaths, between 31 March and 1 April. The fourth death reported during the same period occurred in Singapore.

China has the largest reported number of SARS cases with 806 people diagnosed with the disease and 34 deaths. In Hong Kong, which is an important transportation hub for air travel between China and Taiwan, there have been 685 cases of SARS and 16 deaths.

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